Builders told to go for £3bn public projects

By KATIE TAYLOR FOR MAILONLINE
Updated: 09:25 EST, 23 March 2009

As major victims of the slump, small and medium-sized construction firms are being encouraged to take advantage of the Government's spending pledge through a variety of schemes.

Bidding: Christopher McEwen says bidding is not for the faint-hearted

In last year's Pre-Budget Report, Chancellor Alistair Darling announced an extra £3bn of construction work - including the building of new schools, hospitals, social housing, roads and other transport links - to be brought forward to 2009-2010.

Last week's announcement that the Learning and Skills Council was reviewing funding for 144 college-building projects, where in some cases demolition had already begun, is not typical of most Government projects.

In most cases the work is guaranteed to arrive, even though payment can be slow and margins smaller than in the private sector.

At Gipping Construction, based in Ipswich, public-sector work, including school and hospital building projects throughout East Anglia, account for 60% of its business. The firm employs 30 staff and is set to turn over £8m this year.

However, director Christopher McEwen says: 'Tendering for public-sector contracts is complex, protracted and often unscientific. Frustratingly, the process can vary enormously depending on which public-sector body you are dealing with.'

McEwen's advice to other small firms is not to assume that publicsector contracts will see them through the recession. 'The work is there, but the rules of procurement can suddenly be changed, leaving small businesses worse off if they suddenly no longer qualify,' he says.

Last year's Pre-Budget Report said that public-sector bodies, with the exception of some councils, should award contracts only to businesses that take on apprentices.

Resources for firms seeking public-sector contracts include constructiononline.co.uk, a database of qualified construction contractors and consultants that small and medium enterprises can join. About half of the registered contractors have a turnover of less than £1 m and a quarter have annual earnings under £250,000.

Supply2.gov.uk is a Governmentsponsored website that provides small businesses with access to public-sector contract opportunities typically below £100,000. The portal also provides a forum to register company profiles and expertise and alerts firms to contracts that match their interests.

From financial crisis to recession: Everything you need to know

null

• Recession-watch: When will it end?
• The impact on interest rates (includes predictions)
• The impact on oil prices (includes predictions)
• The impact on the pound (includes predictions)
• What next for stock markets?
• Discounted books on economic history

Some public-sector frameworks, such as Procure21, used by the NHS for construction projects, stipulate that businesses must be able to deliver projects anywhere in the UK, leaving smaller firms unlikely to qualify on their own.

However, by aligning themselves with larger companies already registered with these frameworks, smaller firms may be able to find extra revenue.

Business organisations can also give support. The annual convention of the British Chambers of Commerce in Birmingham next month will include a dedicated procurement zone aimed at helping businesses tap into billions of pounds of public-sector contracts.

Director-general David Frost says: 'This will be a chance for smaller companies to find out how the often complex procurement process works and access valuable revenue streams, which they may have felt unable to bid for.'